The Democrats’ government shutdown ransom, the permanent extension of former President Joe Biden’s COVID-19 health insurance bonus subsidies, was always farcically untethered to the party’s core complaint about President Donald Trump. If Trump is acting like a dictator in unprecedented ways that undermine the future of democracy, how does shoveling hundreds of billions of taxpayer dollars to health insurance companies address the problem?
It doesn’t.
The absurdity of the Democrats’ shutdown antics aside, however, the rest of us are forced to spend far more money on healthcare than we should have to, and the Republican Party owes voters an alternative.
It has been over a decade since former President Barack Obama’s Affordable Care Act was implemented, and it has failed by every metric, as many of us predicted it would. Healthcare spending has continued to rise, insurance markets cover far fewer people than Democrats intended, and Medicaid expansion has failed to make the public healthier or extend life expectancy.
Before COVID-19, only 11 million people had health insurance through the ACA-regulated individual market. People with modest incomes not eligible for Medicaid had their premiums capped at 2% of their incomes, while wealthier Americans paid 10%. The wealthiest received no help from taxpayers at all. The balance between what consumers paid and what insurance companies charged was picked up by taxpayers through subsidies sent directly to the health insurance companies.
Biden’s COVID-19 spending plan, which sent inflation to generational highs, boosted insurance subsidies for everyone, including the most wealthy. As a direct result, the number of people who get health insurance through the ACA individual market has more than doubled to 24 million, as has taxpayer spending on the program. Relatedly, health insurance profits have also surged since 2020.
Democrats claim premiums for all 24 million people on the ACA market “will double” if the COVID-19 bonus subsidies expire, but that is false. As Juniper Research Group founder Chris Jacobs has documented, the Kaiser Family Foundation’s analysis making that claim was deliberately misleading, a fact that Kaiser has since had to acknowledge.
The price consumers will pay when bonus subsidies go away is about 18%, or about $50 to $100 a month for enrollees. That will sting some consumers, but it is far from the doubling Democrats claim.
The solution to rising insurance premiums shouldn’t be to throw more taxpayer money at the problem. Healthcare is costly not because the government fails to subsidize it enough but because government programs and policies over-subsidize comprehensive insurance and low-value care, which drives prices higher. Republicans owe policy choices to consumers worried about rising health premiums.
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These include expanded access to health insurance outside of the highly regulated and costly ACA marketplace, the ability of employers to join together to offer more attractive plans, and more stringent enforcement of healthcare provider price transparency. Over the long term, Republicans should also look to increase the supply of healthcare by expanding medical residency slots and easing supervision rules for nurse practitioners. Healthcare is expensive because we subsidize demand and restrain supply. We can lower healthcare costs by doing the opposite.
We hope the Democratic Party will end its temper tantrum and vote with Republicans to reopen the government soon. When it does, Republicans will have an opportunity to show voters that healthcare reform need not mean bigger government and richer insurance companies. By shifting focus from subsidizing demand to expanding supply, they can unleash competition, broaden access, and finally make healthcare work for patients, not bureaucrats or corporations.